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NEWCO

Proprietary Information: Do Not Distribute

This document is subject to a Non-Disclosure Agreement unless otherwise explicitly agreed to by Newco. By accepting delivery
of this document, the accepting party agreed (a) to keep confidential its contents and not to disclose the same to any third party
or otherwise use the same for any purpose unless consented to in writing by Newco and (b) not to copy this document or any
portion of it. In the event that the accepting party breaches the obligations set forth in the preceding sentence, the accepting
party agrees to indemnify Newco for any damages resulting from such breach.
Executive Summary

The Opportunity
One of the most significant developments in corporate information technology in the coming decade

will be the spread of pervasive computing. The proliferation of inexpensive mobile devices such as

smart-phones, two-way interactive pagers and wireless PDAs is opening up the ability of workers to

interact with key corporate applications, colleagues and clients from virtually anywhere. The ability

of corporations to extend their boundaries with new wireless devices will be critical to future growth

in productivity and to sustaining competitive advantages for businesses across many industries.

The pervasive computing revolution will accelerate the already high levels of corporate expenditures

on information technology. A recent report from CIBC World Markets estimates that worldwide

expenditures on these types of wireless Internet applications will exceed $10 billion by 2002 and $20

billion by 2004.

To a large degree, the enterprise wireless data market is up for grabs. Incumbent players in the

enterprise software arena are saddled with legacy applications optimized for large screens and client

machines with significant amounts of memory. The opportunity is tremendous for new companies

with exciting technologies, focused business strategies and accomplished management to lead this

market.

The Company
Newco is a highly-focused new entrant in the corporate wireless data market. The company has

developed a new generation of enterprise middleware tools, called the “NewcoBuilder Suite,” aimed

specifically at integrating legacy data and applications on an extensible software platform that allows

for extensive user customization, interactivity, and community.

Corporations that employ the NewcoBuilder Suite can offer a rich experience to employees and cus-

tomers over a wide variety of computing devices. They can extend their information boundaries with

the NewcoBuilder Suite while allowing users to master their own information environments. Tremendous

value results through enhancing productivity, opening up new revenue streams and by controlling

waste that takes place in today’s relatively uncoordinated corporate information environments.

Newco | THE INTERNET IS CALLING. 2

Newco is already well positioned to generate meaningful business in two vertical segments where

customers have shown a willingness to pay for the NewcoBuilder Suite and to use the product to reach

out to employees and clients. These segments are financial services (particularly investment banks

and real estate companies) and high technology equipment and manufacturing, particularly complex

engineering organizations that require a high-degree of coordination and communication across dis-

persed workforces.

Today, Newco has advanced from a development stage company to one that has a stable, beta-

stage product that is generating high client enthusiasm. Newco is based in New York City and

has 15 employees. Newco’s management team hails from the world’s leading financial services

and telecommunication firms. Management has a deep network of contacts among relevant cus-

tomers and a relentless focus on generating shareholder value.

Newco forecasts that it will generate $3.5 million in revenue in 2001, $25.4 million in 2002 and

$67 million in 2003. The company expects to be profitable in 2002 given high gross margins gener-

ated from its application service provider (ASP) business model.

To date, Newco has raised $1 million from angel investors and $400,000 from its founders.

Backers to date include senior technologists at Deutsche Bank and Scient, a prominent CEO of a

high-visibility Internet portal, and executives from a number of leading investment banks.

The company is currently looking to raise approximately $5 million in additional capital from institu-

tions and “strategic investors”.

The Product
Our product, the NewcoBuilder Suite, is a web-based application that creates a seamless, enterprise

class solution for information management and delivery. Scalability, platform independence, extensi-

bility and maintainability are integral design considerations. Open standards are employed through-

out to ensure that the NewcoBuilder Suite can easily integrate with external systems and be amenable

to a multitude of deployment scenarios. Specifically, as an enterprise class solution, the NewcoBuilder

Suite is a secure, reliable, and flexible software that can scale to handle the information that a com-

pany’s employees and clients wish to access wirelessly, while it preserves and leverages existing

database/software assets.

Newco | THE INTERNET IS CALLING. 3

The NewcoBuilder Suite has four components:

Content Manager
■ Allows users to generate their own content.
■ Enables users to extract information from corporate applications, legacy databases and compa-
nies’ intranets and extranets.
■ Provides users with a flexible and intuitive interface for managing content and accessing it from
any wired or wireless device.

Community Manager
■ Allows users to create communities of related individuals and to securely share content with
group members.
■ Enables users to join communities created by others and/or by their respective IT administrators.

Alert Manager
■ Allows users to create alerts from either streaming or static data.
■ Enables users to set up alerts either to themselves or to an entire community.
■ Provides users with the ability to monitor changes to any portion of their time-sensitive content
and to alert them when user-specified variations occur.

Wireless Manager
■ Enables the re-purposing of information from within the Content, Community, and Alert
Management systems to devices including browser-enabled mobile phones, interactive pagers,
and PDAs.

With the NewcoBuilder Suite, companies can solve a wide range of business problems through efficient

communication with their clients, customers, and employees — anytime, anywhere.

Newco | THE INTERNET IS CALLING. 4

NewcoBuilder Suite

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Architecture Wireless

The diagram above describes in broad terms the Newco NewcoBuilder Suite and how it relates to our revenue

and technical architecture. The top right quadrant illustrates the revenue model and lists the benefits to the end

user. At Newco, we believe the ASP wave is a paradigm-shifting event regarding how companies think about

leveraging, deploying, and managing technology applications to run their businesses. Associated with the rev-

enue model is Newco’s technical architecture (bottom left) that illustrates our support of and adherence to

open standards. The top left and bottom right quadrants illustrate the NewcoBuilder Enterprise solution and its

wireless components.

Newco | THE INTERNET IS CALLING. 5

Competitive Advantage
While no company has established a meaningful competitive lead in the corporate wireless data

arena there are, of course, a number of players that are achieving traction in the area. These include

724 Solutions, i3 Mobile, Aether Systems, Brience, EveryPath, and IBM. In our full business plan,

we discuss the strengths and weaknesses of each of these competitors in detail.

Broadly speaking, Newco stands out from the competition in the wireless data sector in several
ways:

■ Deep Customization. Newco is alone in the enterprise wireless data space in its approach to
providing applications that create a comprehensive information environment that is customizable
by each user for their respective needs.

■ Usability Advantage. Newco is immediately navigable and intuitive in its use. Moreover, users
do not want to be restricted to accessing information from devices and media dictated to them.
Newco provides extensive freedom of choice.

■ Self-Publishing Capability. Users will want to publish content themselves, not just retrieve that
which is provided to them. Newco is unique in that it allows users to easily mix self-published
material with corporate databases.

■ Open Foundation. Many of the most widely used technologies in the wireless data market are
based on proprietary systems. In contrast, Newco can interface with industry standard data-
bases such as Oracle, widely used enterprise strength application servers, and virtually any XML
capable data store.

■ Focus on High-Value Vertical Segments. Due to the background of its founders and geographical
location in the heart of New York City, Newco is well suited to generate business from high
value-added sectors such as investment banking and the publishing industries.

■ Built-in Group Management. Users will want to communicate with others – small, medium, and/or
large groups of related workgroups, friends, associates, family, etc.

Newco | THE INTERNET IS CALLING. 6

The Newco Philosophy
Newco is alone in the enterprise wireless data space in its approach to providing applications that

create a comprehensive information environment that is customizable by each user for their respec-

tive needs. Newco has developed an application that will not only appeal to the earliest adopters

of these new technologies, but is based on sound, intuitive fundamentals:

■ Users will adopt new technologies quickly if their navigability and benefits are immediately recog-
nizable and intuitive,
■ Users do not want to be restricted to accessing information from devices and media dictated to
them -- they want to choose,
■ Users will want to have access to a variety of information, not just one or two corporate applica-
tions that have been “mobilized”,
■ Users will want to publish content themselves, not just retrieve that which is provided to them,
■ Users will want to communicate with others – small, medium, and/or large groups of related work-
groups, friends, associates, family, etc.,
■ Users want to customize their operating environments.

In order to be successful in the enterprise wireless space, one has to create a technology that is

robust and scalable, and one must provide an application that an enterprise users’ employees and

clients will want to use and will want to integrate into their work lives.

Value Proposition
Newco creates a dual value for its clients. First, Newco becomes a means for additional rev-

enue generation when used by our clients to increase their staff’s effective client relations and create

an ongoing and “always-on” relationship with their clients. Second, when used as a tool for creating

internal efficiencies within companies, Newco generates significant costs savings as employees

can be more efficient with their time when accessing and creating corporate information and when

communicating with one another.

Just as the Internet provided large companies another channel for revenue generation, so too the

mobile Internet provides the opportunity for large companies to address the specific needs of their

clients. Similarly, the Internet’s greater affect on established enterprises was to introduce a means

Newco | THE INTERNET IS CALLING. 7

for greater operational efficiencies within organizations. Newco’s toolset was specifically designed

to allow each client to choose how the NewcoBuilder Suite will be deployed within his or her particular

organizational structure to maximize the dual revenue/cost value. Used as either a tool for revenue

generation or as a means to create operational efficiencies within a client, Newco becomes a

powerful tool for expanding a company’s bottom-line results.

Business Model
Newco’s business model is focused on generating revenue from deals with mobile enterprises in

key vertical market segments including financial services (e.g., investment banking and real estate),

and select manufacturing companies.

Newco plans to sell the NewcoBuilder Suite on an ASP basis. Revenues will be generated per client

from a one-time setup fee, a recurring monthly user fee, a recurring hosting fee, an annual mainte-

nance fee, and professional and engineering services. Revenue is also expected from selected

licensing of the NewcoBuilder Suite to enterprises who wish to own the product outright. The Company’s

target markets are enormous and demand for the Company’s products is likely to be high.

Newco is currently focused on product development and product marketing. Moreover, we have

successfully begun a beta program with a number of companies representing the core areas that we

are targeting in Phase One of our business development efforts. On the marketing side, we are

finding immediate validation of our value proposition. We are currently in active discussions with sev-

eral potential customers in our target markets. In addition, preliminary discussions with a variety of

Global 1000 corporations, companies in optical infrastructure, investment banking, and real estate

have yielded a high degree of interest in the NewcoBuilder Suite.

Exit Strategy
By creating a compelling value proposition built around multiple revenue streams from our ASP busi-

ness model and licensing, Newco is poised to achieve a significant valuation in a relatively short

period of time. An investor’s exit strategy could take the form of an IPO or a sale to a number of

potentially interested entities.

Newco | THE INTERNET IS CALLING. 8

Management

Newco was founded in January 2000 as a Delaware C Corporation. Newco has a management

team with extensive experience in key areas including technology, marketing, and finance.

Team Biographies
Bill Johnson. President. Bill joined Newco from Deutsche Banc Alex. Brown where he was
a Director and head of the Yankee Origination Group. Bill was responsible for representing corpora-

tions, financial institutions, and governments from Europe, Asia, and Australasia and for arranging

their financings in the SEC registered, 144A, and private placement markets. Bill’s clients included

companies in the telecom, print, new media, retailing, mining, banking, and manufacturing industries.

Prior to his work at Deutsche Bank, Bill held a similar position with UBS Securities in New York. He

currently serves on Advisory Boards of several Internet companies. Bill received a BA from

Connecticut College in New London, CT and attended Doshisha University in Kyoto, Japan.

Dave Sarkowsky. Founder. Dave comes to Newco from Giant Investments where he
served as President and was instrumental in the development of several businesses, in areas rang-

ing from natural resources to Internet startups. He has extensive experience in media and market-

ing, the Internet, and international finance. He received a BA in Literature from Kenyon College and

a MA from the University of York.

Steve Dillon. Founder. Steve joins Newco from Capital Appreciation Group, a venture capital
firm, where he focused on the development of wireless data companies. Steve has over a decade of

experience in venture capital, information technology and investment banking with past positions at

Goldman Sachs, Merrill Lynch and CIBC Oppenheimer. He received a BS and an MBA from

Penn State University.

Cindy Sherman. Vice President of Business Development. Cindy joins Newco from AT&T
Wireless, where she was National Sales Director for the Service Provider Markets Division. Cindy

brings over 19 years of technology and wireless experience to Newco, with previous roles as

Wireless Sales Director at AT&T Business Markets Division covering major corporate accounts and

as Vice President of Business Development at INTECO Corporation. Her responsibilities included

sales and marketing, both nationally and internationally for large clients, as well as the creation of

new business segments. Cindy graduated with a BS from the Rochester Institute of Technology.

Newco | THE INTERNET IS CALLING. 9

Steven George. Director of Corporate Development. Steven brings extensive investment
banking experience to Newco having worked at both Deutsche Bank and Warburg Dillon Read.

He has a background as Co-Founder of Picked-Pay, an Internet-based payment system. Steven

began his career at Warburg Dillon Read in London and holds a BA in Economics from Colby

College.

Tony Morelli. Director of Technology. Tony joins Newco from Priceline.com where he
designed and implemented several key distributed applications early in Priceline’s development. He

has seven years of experience in advanced database development, object oriented methodology

and Internet applications. Tony holds a Bachelors degree in Civil Engineering from Lehigh

University and a Masters degree in Computer Science from Columbia University.

Cam Suo. Director of Interface Design. Cam brings over 15 years of design experience to
Newco. He has won over 100 awards, including the prestigious American Institute of Graphic Arts

Award for Excellence in Design, and has held exhibits of his work throughout the country. He has

previously completed projects for a number of leading companies including IBM, Ziff-Davis, Pfizer

and currently is an adjunct professor at Pratt Institute.

Jerry Dishman. Director of Wires.com. Jerry brings his background as a freelance writer and
editor to lead Wires.com, an online wireless lifestyle magazine that serves as a companion to

Newco. His experience includes a position at NBC and as an assistant producer for Streetlight

Films. As a member of Teach for America, he taught for five years in the South Bronx. He holds a

BA in English from Yale University.

Newco | THE INTERNET IS CALLING. 10

Outside Director Biographies
The following three outside directors sit on the board:

Kelly Albright. Director. Kelly comes to Newco with 16 years at major Wall Street houses on
each continent, including Merrill Lynch, Nomura Securities and, most recently, Deutsche Bank. Kelly

is considered one of the pioneers of electronic trading on Wall Street. He was responsible for the

design, development, and creation of what is now Deutsche Bank’s core electronic trading platform,

Butobahn. He is a frequent speaker at conferences on electronic trading and has chaired a number

of task forces for the Bond Market Association, a Wall Street Trade group. He received his BA from

Rice University.

Phil Brockman. Director. Phil is a Principal with WR Hambrecht + Co., an online investment
bank. He has previously worked with a number of investment banks and academic institutions. He

is an advisor/board member for several Internet properties including dotlearn, Icon20, Intellipro and

Service911. Phil holds a Ph.D. in Economics from UCLA.

Ray Knight. Director. Ray is CFO of Wireless International Corporation, a high-speed

"last mile" wireless equipment manufacturer and solutions provider. He recently served as a

Principal of FinanceMatrix.com, a B2B Financial portal. Ray previously practiced law with

Foley & Lardner and Skadden, Arps, Slate, Meagher & Flom and worked as an investment banker

with Merrill Lynch & Co. He holds a B.S. in Business from Georgetown and a J.D. from the

University of Chicago.

Newco | THE INTERNET IS CALLING. 11

 FTP
POP3

Application Server
Files BEA Web Logic 5.1

View, Edit, and

Self Published
Agent Content
(Data Feed Handler)
Alert Management
Alert Agent
SQL
Oracle SMTP, SMS Servers
WML, SMS

JDBC
Database LDAP

www.newco.com Internet
Information Vehicle EJB
HTTP/S

Internet
Intranet
Extranet HTTP/S

HTML
Page Agent Content
(Data Feed Handler) Agent Content Manager Community
Manager
View, Edit, and
Self Published
Content
HTTP

Newco | THE INTERNET IS CALLING.

12
NEWCO, INC.
(A Development Stage Company)

STATEMENT OF OPERATIONS
NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000

Operating Expenses:
Payroll, officers $ 44,000
Payroll, sales and marketing 33,000
Payroll, technical 164,000
Payroll, office 9,000
Payroll, Wires Division 45,000
Payroll taxes 30,000
Employee benefits and processing 26,000
Programming costs 40,000
Writers 24,000
Computer costs 20,000
Internet costs 42,000
Marketing and promotion 9,000
Conferences 11,000
Travel and entertainment 46,000
Rent 64,000
Telephone 15,000
Light, heat and power 1,000
Office expenses and supplies 19,000
Printing and copying costs 15,000
Furniture rental 3,000
Dues and subscriptions 1,000
Professional fees 67,000
Insurance 1,000
Recruiting costs 16,000
Financing fees 2,000
Relocation costs 11,000
Bank charges 1,000
759,000
Interest income 1,000

Loss accumulated in the development stage $ (758,000)

13
NEWCO, INC.
(A Development Stage Company)

BALANCE SHEET
SEPTEMBER 30, 2000

Assets:
Current assets
Cash and cash equivalents $ 299,000

Equipment and improvements 182,000

Other assets
Notes receivable 45,000
Subscriptions receivable 6,000
Security deposits 27,000
78,000

$ 559,000

Liabilities and Stockholders' Equity

Liabilities:
Current liabilities
Accrued expenses $ 16,000

Long-term debt
Notes payable 400,000

Stockholders' equity:
Common stock 6,000
Preferred stock 1,000
Additional paid-in capital 894,000
Deficit accumulated in the development stage (758,000)
Total stockholders' equity 143,000

$ 559,000

14
 NEWCO, INC.
BURN RATE
2000

Actual Projected
March April May June July August September October November December Total

General & Administrative

Salary & Benefits 5,800 5,800 8,300 25,000 25,000 25,000 22,500 25,000 25,000 25,000 199,200
T&E 3,600 6,600 15,000 20,000 30,000 30,000 40,000 40,000 50,000 50,000
Rent & Rent Related Expenses 5,300 6,500 5,400 9,300 9,300 9,100 9,100 9,100 9,100 9,100 81,300
Datacom/Telecom 7,000 7,100 7,300 8,300 8,600 9,700 10,400 11,100 12,400 13,100 106,000
Legal 2,700 1,500 15,000 3,000 3,000 1,500 1,500 1,500 1,500 1,500 32,700
Accounting - - - 1,000 2,000 - - - - - 3,000
Office Supplies/Postage/Stationary 700 200 300 400 500 - - - - - 2,300
Other 12,500 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 35,000
Total 37,600 29,900 53,500 69,200 80,600 77,500 85,700 88,900 100,200 100,900 749,000

Marketing Development
Staff 3,900 9,200 9,200 9,200 9,200 9,200 9,200 9,166 9,166 9,166 88,398
TBD (Marketing Comm) - - - - - - - - - - -
TBD (Web Site) 15,000 - - 15,000 - - 15,000 - - 15,000 60,000
TBD (PR) - - 15,000 15,000 15,000 - - - - - 45,000
T&E - - - - - - - - - - 900
Other - 2,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 78,200
Total 18,900 11,200 33,200 48,200 33,200 18,200 33,200 9,000 9,000 24,000 245,000

Programming
Salary & Benefits 6,700 18,400 18,400 18,400 18,400 18,400 18,400 18,400 18,400 18,400 175,600
Contract Programmers 6,300 9,500 9,500 9,500 9,500 9,500 9,500 9,500 9,500 9,500 95,500
Other - - - - - - - - - - -
Total 13,000 27,900 27,900 27,900 27,900 27,900 27,900 27,900 27,900 27,900 271,100

Server Licensing Fees

BEA 42,000 - - - - 2,000 2,000 2,000 2,000 2,000 52,000
Total 42,000 - - - - 2,000 2,000 2,000 2,000 2,000 52,000

Capital Expenditures
Hardware 41,900 18,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 179,900
Software - - - - - - - - - - -
Total 41,900 18,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 179,900

Total 153,400 87,000 129,600 160,300 156,700 140,600 163,800 142,800 154,100 169,800 1,497,000

Note: Figures rounded to the nearest hundred

15
 NEWCO, INC.
PROJECTED ANNUAL INCOME STATEMENT

2000 2001 2002 2003

REVENUES
Standard $ 50,000 $ 1,133,000 $ 5,663,000 $ 8,494,000
Medium $ - $ 957,000 $ 7,650,000 $ 15,300,000
Large $ - $ 1,286,000 $ 9,645,000 $ 25,720,000
Recurring $ - $ 64,000 $ 2,273,000 $ 17,506,000
Other $ 12,000 $ 80,000 $ 120,000 $ 160,000
Total Revenues $ 62,000 $ 3,520,000 $ 25,351,000 $ 67,180,000

OPERATING EXPENSES
General & Administrative $ 479,000 $ 1,632,000 $ 4,064,000 $ 5,707,000
Sales & Marketing $ 226,000 $ 1,936,000 $ 5,390,000 $ 11,005,000
Product Development $ 328,000 $ 1,652,000 $ 2,862,000 $ 3,865,000
Direct Operating Costs $ 26,000 $ 603,000 $ 1,427,000 $ 3,620,000
Total Operating Expenses $ 1,059,000 $ 5,823,000 $ 13,743,000 $ 24,197,000

INCOME FROM OPERATIONS $ (997,000) $ (2,303,000) $ 11,608,000 $ 42,983,000

DEPRECIATION $ 53,000 $ 370,000 $ 400,000 $ 500,000

INCOME TAX EXPENSE $ - $ - $ 2,997,000 $ 16,994,000

NET PROFIT (LOSS) $ (1,050,000) $ (2,673,000) $ 8,611,000 $ 25,989,000

16
 NEWCO, INC.
PROJECTED QUARTERLY STATEMENT

Q4 Year Ended Q1 Q2 Q3 Q4 Year Ended Year Ended Year Ended

31-Dec-00 31-Dec-00 31-Mar-01 30-Jun-01 30-Sep-01 31-Dec-01 31-Dec-01 31-Dec-02 31-Dec-03
REVENUE:

Standard $ 49,500 $ 50,000 $ 283,250 $ 283,250 $ 283,250 $ 283,250 $ 1,133,000 $ 5,663,000 $ 8,494,000
Medium $ - $ - $ 239,250 $ 239,250 $ 239,250 $ 239,250 $ 957,000 $ 7,650,000 $ 15,300,000
Large $ - $ - $ 321,500 $ 321,500 $ 321,500 $ 321,500 $ 1,286,000 $ 9,645,000 $ 25,720,000
Recurring $ - $ - $ 16,000 $ 16,000 $ 16,000 $ 16,000 $ 64,000 $ 2,273,000 $ 17,506,000
Other $ 12,000 $ 12,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 80,000 $ 120,000 $ 160,000
Total Revenue $ 61,500 $ 62,000 $ 880,000 $ 880,000 $ 880,000 $ 880,000 $ 3,520,000 $ 25,351,000 $ 67,180,000

OPERATING EXPENSES:

General & Administrative

Payroll $ 26,500 $ 70,000 $ 87,500 $ 92,500 $ 92,500 $ 92,500 $ 365,000 $ 1,760,000 $ 2,605,000
Payroll, taxes 11% $ 20,000 $ 38,000 $ 52,168 $ 60,583 $ 64,020 $ 72,820 $ 249,590 $ 644,738 $ 919,600
Employee benefits and processing 14% $ 19,500 $ 38,500 $ 66,395 $ 77,105 $ 81,480 $ 92,680 $ 317,660 $ 820,575 $ 1,170,400
Computer costs $ 4,000 $ 8,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 20,000 $ 25,000 $ 30,000
Internet Costs $ 14,000 $ 28,000 $ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 24,000 $ 48,000 $ 96,000
Rent $ 57,000 $ 101,000 $ 57,000 $ 57,000 $ 57,000 $ 57,000 $ 228,000 $ 240,000 $ 260,000
Telephone $ 15,000 $ 21,900 $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 60,000 $ 80,000 $ 100,000
Light, heat and power $ 3,000 $ 5,800 $ 6,000 $ 7,000 $ 8,000 $ 6,000 $ 27,000 $ 30,000 $ 34,000
Legal $ 25,000 $ 63,500 $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 100,000 $ 125,000 $ 150,000
Accounting $ 2,500 $ 2,500 $ 5,000 $ 2,500 $ 2,500 $ 2,500 $ 12,500 $ 15,000 $ 20,000
Office expenses and supplies $ 14,000 $ 29,000 $ 10,000 $ 10,000 $ 10,000 $ 10,000 $ 40,000 $ 45,000 $ 50,000
Printing and copying costs $ 15,000 $ 21,700 $ 10,000 $ 10,000 $ 10,000 $ 10,000 $ 40,000 $ 45,000 $ 50,000
Recruiting costs $ 6,600 $ 20,600 $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 100,000 $ 125,000 $ 150,000
Insurance $ 1,000 $ 3,600 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 8,000 $ 10,000 $ 12,000
Other $ 14,000 $ 26,000 $ 10,000 $ 10,000 $ 10,000 $ 10,000 $ 40,000 $ 50,000 $ 60,000
Subtotal $ 237,100 $ 478,100 $ 382,063 $ 404,688 $ 413,500 $ 431,500 $ 1,631,750 $ 4,063,313 $ 5,707,000

Sales & Marketing

Payroll, sales and marketing $ 43,000 $ 66,000 $ 100,750 $ 118,250 $ 149,500 $ 229,500 $ 598,100 $ 1,740,000 $ 2,590,000
Travel 50% $ 20,000 $ 72,000 $ 50,375 $ 59,125 $ 74,750 $ 114,750 $ 299,000 $ 870,000 $ 1,295,000
XXX Salaries $ 22,000 $ 22,000 $ 71,000 $ 81,250 $ 81,250 $ 81,250 $ 314,750 $ 600,000 $ 890,000
Writers $ 16,000 $ 16,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 100,000 $ 150,000 $ 200,000
XXX.com $ 38,000 $ 75,000 $ 96,000 $ 106,250 $ 106,250 $ 106,250 $ 414,750 $ 750,000 $ 1,090,000
Promotion Expense $ 4,000 $ 4,000 $ 75,000 $ 75,000 $ 75,000 $ 75,000 $ 300,000 $ 1,000,000 $ 3,000,000
Advertising Expense $ 5,000 $ 9,000 $ 75,000 $ 75,000 $ 75,000 $ 75,000 $ 300,000 $ 1,000,000 $ 3,000,000
Other $ - $ - $ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 24,000 $ 30,000 $ 30,000
Subtotal $ 110,000 $ 226,000 $ 403,125 $ 439,625 $ 486,500 $ 606,500 $ 1,935,850 $ 5,390,000 $ 11,005,000

Product Development
Payroll, technical $ 105,000 $ 276,000 $ 215,000 $ 258,750 $ 258,750 $ 258,750 $ 991,250 $ 1,761,250 $ 2,275,000
Programming Costs $ 18,000 $ 51,500 $ 60,000 $ 60,000 $ 60,000 $ 60,000 $ 240,000 $ 400,000 $ 600,000
Outside Services/Consulting $ - $ - $ 75,000 $ 75,000 $ 75,000 $ 75,000 $ 300,000 $ 500,000 $ 750,000
Other $ - $ - $ 30,000 $ 30,000 $ 30,000 $ 30,000 $ 120,000 $ 200,000 $ 240,000
Subtotal $ 123,000 $ 327,500 $ 380,000 $ 423,750 $ 423,750 $ 423,750 $ 1,651,250 $ 2,861,250 $ 3,865,000
$ -
Direct Operating Costs
Full-Time Engineers $ - $ - $ 30,833 $ 83,333 $ 118,750 $ 157,500 $ 390,417 $ 876,250 $ 1,520,000
Hosting $ 23,000 $ 23,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 200,000 $ 500,000 $ 2,000,000
Other $ 3,000 $ 3,000 $ 3,000 $ 3,000 $ 3,000 $ 3,000 $ 12,000 $ 50,000 $ 100,000
Subtotal $ 26,000 $ 26,000 $ 83,833 $ 136,333 $ 171,750 $ 210,500 $ 602,417 $ 1,426,250 $ 3,620,000

Total Operating Expenses $ 496,100 $ 1,057,600 $ 1,249,021 $ 1,404,396 $ 1,495,500 $ 1,672,250 $ 5,821,267 $ 13,740,813 $ 24,197,000

Income From Operations $ (434,600) $ (995,600) $ (369,021) $ (524,396) $ (615,500) $ (792,250) $ (2,301,267) $ 11,610,188 $ 42,983,000

Depreciation (5yrs on CapEx) $ 30,000 $ 53,000 $ 55,000 $ 80,000 $ 105,000 $ 130,000 $ 370,000 $ 400,000 $ 500,000

Income Tax Expense (@ 40%) - $ - - - - - $ - $ 2,996,128 $ 16,993,200

Net Income (Loss) $ (464,600) $ (1,048,600) $ (424,021) $ (604,396) $ (720,500) $ (922,250) $ (2,671,267) $ 8,614,059 $ 25,989,800

Capital Expenditures $ 130,000 $ 330,000 $ 500,000 $ 500,000 $ 500,000 $ 500,000 $ 2,000,000 $ 2,500,000 $ 2,500,000

Cash Flow $ (564,600) $ (869,021) $ (1,024,396) $ (1,115,500) $ (1,292,250) $ 6,514,059 $ 23,989,800

Cumulative Cash Flow $ (1,345,600) $ (2,214,621) $ (3,239,017) $ (4,354,517) $ (5,646,767) $ 867,293 $ 24,857,093

17
 Newco Pricing and Deployment Model

Base Assumptions Future Deployment Projections

Standard Medium Large Cumulative Number & Type of Deployments

Total Total
Non Recurring Year Standard Medium Large Deployments Revenue
Set Up Fee(1) 45,000 75,000 100,000 Current 1 - - 1 $ 113,250
Professional Services(2) 4,500 11,250 20,000 2001 10 5 2 17 3,438,500
Recurring 2002 50 40 15 105 25,229,750
Per User(3) $ 15.00 $ 12.00 $ 8.00 2003 75 80 40 195 67,018,500
Number of users 250 500 5,000
(3)
Hosting 1,000 1,500 1,500
Maintenance(4) 6,750 15,000 25,000

Sales Cyle (in months) 3 6 9

Average Length of Contract 2 2 3

(1) One time charge to client

(2) % of Set-up 10% 15% 20%
(3) Monthly charge
(4) % of Set-up fee 15% 20% 25%

Revenue Stream Projections

2000 2001
Revenue Total Revenue Total
Stream Standard Medium Large Deployments Stream Standard Medium Large Deployments
Deployments 1 - - 1 Deployments 10 5 2 17
Set Up 45,000 - - 45,000 Set Up 450,000 375,000 200,000 1,025,000
Prof. Services 4,500 - - 4,500 Prof. Services 45,000 56,250 40,000 141,250
Per User 45,000 - - 45,000 Per User 450,000 360,000 960,000 1,770,000
Hosting 12,000 - - 12,000 Hosting 120,000 90,000 36,000 246,000
Maintenance 6,750 - - 6,750 Maintenance 67,500 75,000 50,000 192,500
Total 113,250 - - 113,250 Total 1,132,500 956,250 1,286,000 3,374,750

2002 2003
Revenue Total Revenue Total
Stream Standard Medium Large Deployments Stream Standard Medium Large Deployments
Deployments 50 40 15 105 Deployments 75 80 40 195
Set Up 2,250,000 3,000,000 1,500,000 6,750,000 Set Up 3,375,000 6,000,000 4,000,000 13,375,000
Prof. Services 225,000 450,000 300,000 975,000 Prof. Services 337,500 900,000 800,000 2,037,500
Per User 2,250,000 2,880,000 7,200,000 12,330,000 Per User 3,375,000 5,760,000 19,200,000 28,335,000
Hosting 600,000 720,000 270,000 1,590,000 Hosting 900,000 1,440,000 720,000 3,060,000
Maintenance 337,500 600,000 375,000 1,312,500 Maintenance 506,250 1,200,000 1,000,000 2,706,250
Total 5,662,500 7,650,000 9,645,000 22,957,500 Total 8,493,750 15,300,000 25,720,000 49,513,750

18
 NEWCO INC.
PROJECTED STAFFING
2000

Actual Projected FY 2000

Title Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Total

Corporate Management
CEO 0 - - - - - - - - - - - - -
President 1 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 100,000
CFO 0 - - - - - - - - - - - - -
COO 0 - - - - - - - - - - - - -
Administrative Assistant 1 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 35,000
VP HR 0 - - - - - - - - - - - - -
Director HR 1 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 70,000
Senior Associate 1 4,583 4,583 4,583 4,583 4,583 4,583 4,583 4,583 4,583 4,583 4,583 4,583 55,000
VP Operations 0 - - - - - - - - - - - - -
Director Operations 1 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 70,000
Administrative Assistant 0 - - - - - - - - - - - - -
Senior Associate 1 4,583 4,583 4,583 4,583 4,583 4,583 4,583 4,583 4,583 4,583 4,583 4,583 55,000
Junior Associate 0 - - - - - - - - - - - - -
VP Finance 0 - - - - - - - - - - - - -
Corporate Controller 1 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Staff Accountant 1 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Administrative Assistant 1 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 35,000
Senior Associate 1 4,583 4,583 4,583 4,583 4,583 4,583 4,583 4,583 4,583 4,583 4,583 4,583 55,000
Senior Associate 0 - - - - - - - - - - - - -
Junior Associate 1 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 35,000
Junior Associate 0 - - - - - - - - - - - - -
VP Business Development 1 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 175,000
Director Business Development 1 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Administrative Assistant 1 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 35,000
Business Development 1 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Business Development 1 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Business Development 1 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Business Development 1 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Business Development 1 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Business Development 0 - - - - - - - - - - - - -
Business Development 0 - - - - - - - - - - - - -
Business Development 0 - - - - - - - - - - - - -
Business Development 0 - - - - - - - - - - - - -
Business Development 0 - - - - - - - - - - - - -
VP Sales 1 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 175,000
Director Sales 1 10,417 10,417 10,417 10,417 10,417 10,417 10,417 10,417 10,417 10,417 10,417 10,417 125,000
Administrative Assistant 1 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 35,000
Sales Associates 1 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 80,000
Sales Associates 1 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 80,000
Sales Associates 1 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 80,000
Sales Associates 1 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 80,000
Sales Associates 1 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 80,000
Sales Associates 0 - - - - - - - - - - - - -
Sales Associates 0 - - - - - - - - - - - - -
Sales Associates 0 - - - - - - - - - - - - -
Sales Associates 0 - - - - - - - - - - - - -
Sales Associates 0 - - - - - - - - - - - - -
CTO 1 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 175,000
Director Technology 1 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 70,000
Administrative Assistant 1 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 2,917 35,000
Senior Network Engineer 1 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 80,000
Senior Network Engineer 1 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 80,000
Senior Network Engineer 0 - - - - - - - - - - - - -
Junior Network Engineer 1 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Junior Network Engineer 0 - - - - - - - - - - - - -
Senior Database Specialist 1 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 80,000
Senior Database Specialist 1 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 80,000
Senior Database Specialist 0 - - - - - - - - - - - - -
Junior Database Specialist 1 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Junior Database Specialist 0 - - - - - - - - - - - - -
Senior Application Developer 1 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 80,000
Senior Application Developer 1 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 80,000
Senior Application Developer 1 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 80,000
Senior Application Developer 1 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 80,000
Senior Application Developer 1 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 80,000
Junior Application Developer 1 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Junior Application Developer 1 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Junior Application Developer 1 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Junior Application Developer 1 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Junior Application Developer 1 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Director Web Interface Design 1 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 70,000
Senior Web Interface Architect 1 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 70,000
Senior Web Interface Architect 1 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 70,000
Senior Web Interface Architect 1 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 70,000
Junior Web Interface Architect 1 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 50,000
Junior Web Interface Architect 1 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 50,000
Director Wireless Interface 1 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 70,000
Senior Wireless Architect 1 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 70,000
Senior Wireless Architect 1 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 70,000
Senior Wireless Architect 1 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 70,000
Junior Wireless Architect 1 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 50,000
Junior Wireless Architect 1 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 50,000
Senior Wireless Interface Architect 1 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 70,000
Senior Wireless Interface Architect 1 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 70,000
Senior Wireless Interface Architect 1 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 5,833 70,000
Junior Wireless Interface Architect 1 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 50,000
Junior Wireless Interface Architect 1 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 50,000
Total Monthly Salary $ 368,750 $ 368,750 $ 368,750 $ 368,750 $ 368,750 $ 368,750 $ 368,750 $ 368,750 $ 368,750 $ 368,750 $ 368,750 $ 368,750 $ 4,425,000

19